The United States of America for the Use of Harbor Construction Company, Inc. v. T.H.R. Enterprises, Inc. et al

Filing 17

MEMORANDOM ORDER: granting 12 Motion to Dismiss for Failure to State a Claim. Defendants' motion to stay proceedings in this Court and to compel arbitration of the instant dispute is GRANTED. ECF No. 13. No ruling is issued as to the separate ly filed motion to dismiss. ECF No. 12. It is hereby ORDERED that until this case is reactivated by Court order, it shall be stricken from the active docket and no longer considered a pending case for administrative purposes. Plaintiff and counsel for Defendants are each INSTRUCTED to file a status update with this Court no later than December 31, 2014.Signed by District Judge Mark S. Davis and filed on 9/9/2014. (bgra)

UNITED

STATES

DISTRICT

EASTERN DISTRICT

COURT

OF

FOR

THE

VIRGINIA

FILED

Norfolk Division

SEP - 9 2014
THE

UNITED

STATES

OF

the

Use

HARBOR

CONSTRUCTION

of

COMPANY,

AMERICA

for

CLERK, US DISTRICT COURT
NORFOLK, VA

INC.,

Plaintiff,
Civil

v.

T.H.R.

ENTERPRISES,

No.

4:14cvl7

INC.,

and

THE HANOVER INSURANCE COMPANY,

Defendants.

MEMORANDUM

Currently
pursuant

to

Procedure,
compel

motions

pending
Rule

in

alternative

were

Enterprises,
("Hanover")

this

case

of

the

12(b)(6)

and a motion

Inc.

are

a

motion

Federal

to stay proceedings

dispute

filed

ORDER

resolution.

collectively

("THR")

(collectively,

and

The

Rules

in

ECF Nos.

by

of

this
12,

dismiss
Civil

Court
13.

and
Both

defendants

T.H.R.

Insurance

Company

Hanover

"Defendants").

to

Plaintiff,

the United

States of America for the use of Harbor Construction Company,
Inc.

("Plaintiff"),

either

motion.

GRANTS

the

has

For

unopposed

dispute resolution.

not

the

filed a response

reasons

motion

to

set
stay

forth
and

in opposition
below,

compel

the

to

Court

alternative

I.

On September 22,

2 011,

the United States of America entered

a contract with THR wherein THR would act as a prime contractor
and provide construction services and improvements for a project

on Langley Air Force Base in Hampton,
6,

9.

Hanover

acted

as

a

Virginia.

surety

under

the

furnished the United States with a payment bond.
On

October

("Harbor")

19,
and

Subcontract")

labor,

and

2011,
THR

Harbor

entered

a

requiring Harbor

materials

in

Construction

to provide

exchange

change orders and additional work.

that it completed

written

for

ECF No. 8,
contract

electrical

6.

Inc.

subcontract

("the

services,

$1,400,000,

Id. HH 11-12.

and

Id. HU 3,
Company,

HH

excluding

Harbor claims

the work required under the Subcontract,

as

well as "change orders and directions for extra work," in July
2013.

id^ HH 12-13,

16.

After performing the work,

demanded payment from THR multiple times,
refused to pay a balance of $122,526.25.

Harbor

but THR purportedly

Id. UH 13-15.

Harbor filed the instant action against THR and Hanover in

February of 2014,

and subsequently filed an amended complaint

alleging three grounds for recovery.

is a

Miller Act

claim

against Hanover

payment bond.

Id. 1M 20-26.

claim against

THR.

Id.

See id. Hf 20-32.

^

enrichment claim against THR.

as

surety

Count I

under

the

Count II is a breach of contract

27-28.

Count

Id. HU 29-32.

III

is an unjust

II.

Defendants'
12(b) (6),
claim

motion

to

which authorizes

within

a

dismiss
the

complaint,

is

filed

dismissal

based

on

a

of

pursuant
a

the

12(b)(6).

Defendants'

language

Plaintiff's

of

the

complaint,

plaintiff's

in

Subcontract,

which

"failure
Fed.

to

R. Civ.

is

to

resolve

to
all

attached

to

THR

and expressly provides

order

or a

motion seeking a stay is grounded in

elect alternative dispute resolution,
"arbitration,"

Rule

complaint,

state a claim upon which relief can be granted."
P.

to

the

right

to

"mediation"

or

include
disputes

arising

under

the Subcontract.

As

stated

alternative

above,

dispute

Defendants'
resolution

motion
is

objection to such requested relief,

to

stay

unopposed.

the

and

compel

Absent

any

Court considers whether

it is appropriate to compel the parties to engage in alternative
dispute resolution, as elected by THR.
The pertinent language of

[THR] 's sole election,
or

related

in

any

any and all

way

decided by mediation,

or

Subcontract

therein

"shall be

of

claim

any

manner

further

to

chosen by
states

[Harbor]'s

against

disputes arising in any way

arbitration or

resolution proceeding as
The

the Subcontract states that " [a]t

[THR]'s

[the

other alternative

[THR] ."

that

Subcontract]

the

ECF No.
remedies

sole and exclusive

bonding

company

may

dispute

8,

at

set

remedy

pursuant

be

13.

forth

in lieu

to

the

terms of any bond or any other procedure or law, regardless of

the outcome of the claim."

Id.

Thus, the plain language of the

Subcontract expressly authorizes THR to elect arbitration as

alternative
clause

to

litigation.

may be

Although

susceptible

to

a

such contractual

legal

challenge,

an

election

Plaintiff

has

not filed a brief contending that Harbor agreed to this clause
as

a

result

of

fraud

or

duress,

nor

has

Harbor

otherwise

challenged the enforceability of such clause in this case.

Mechanical

Supp.

Power Conversion,

2d 716,

719

legal challenge
on

the

basis

(E.D. Mich.

to

the

that

Nelson,

v.

2007)

Cobasys,

the

"right

to

L.L.C.,

500

compel

an arbitration clause
arbitration

was

the parties") ; Dan Ryan Builders,

682 F.3d 327, 329-30

(4th Cir.

2012)

provision

exchange

promises

of

which holds that
adequate

must
to

provision

Dan Ryan Builders,

of

and

mutually
North

"when a contract as a whole
there

contained

parties to the contract

2012)

a

arbitrate,"

consideration,

arbitration

contain

Inc.

is

no

in

that

not
Inc.

(recognizing a

conflict between Maryland contract law, which requires that
arbitration

F.

(rejecting the plaintiff's

enforceability of

mutually held by both of

v.

L.L.C.

Cf.

"an

coextensive

Carolina

law,

is supported by

requirement

contract

that

an

subject

all

to the same arbitration obligations");
v.

Nelson,

737

S.E.2d 550,

560

(W.

Va.

(answering a question certified by the United States Court

Appeals

for

the

Fourth

Circuit

and

adopting

a

standard

similar to North Carolina,

whereby a

"mutuality of obligation"

is not required for a single arbitration clause within a multi-

clause contract,

but acknowledging that "in assessing whether a

contract provision is substantively unconscionable,
consider whether the

[arbitration]

a court may

provision lacks mutuality of

obligation").

Both Virginia law and federal

disputes,

and pursuant to federal

the

of

scope

arbitration,

arbitrable

issues

policy favor arbitration of

law,

should

"xany doubts concerning
be

resolved

in

favor

whether the problem at hand is the construction of

the contract language itself or an allegation of waiver,
or a

like

Hosp.,
Cone

defense

to

arbitrability.'"

115 F.3d 272,

Mem'l

(1983));
L.L.C.,

Hosp.

see
263

TM
Va.

Virginia

favors

evidence

or

contractual

v.

273-74
Mercury

Delmarva
116,

122

Constr.

Power,

contract

Cir.

1999);

is

see

460

("[T]he

that

this

THR's

untimely,

or

is

v.

delay,

Hilton Head

(quoting Moses H.

v.

Here,

provision,

It is plain that giving one party
resolution process is improper.
recognized that a system that gave
identity of potential arbitrators,
sided benefits to that same party,
biased decisionmaker."
Hooters of
(4th

Corp.,

(2002)

clause

1997)

L.L.C.

contending

arbitration

O'Neil

(4th Cir.

arbitration.").

argument

unenforceable

938-40

of

U.S.

NCP of
public

Court

1,

Virginia,
policy

lacks

invocation
is

based

otherwise

24-25

of
on

of

any
the
an

improper.1

overwhelming control over the dispute
For example, the Fourth Circuit has
one party exclusive control over the
and further provided additional one
was improperly "crafted to ensure a
Am., Inc. v. Phillips, 173 F.3d 933,

Murray v.

United

Food

& Commercial

Workers

Absent

any

challenge

to

contractual

arbitration

enforceable

under

See

TM

Delmarva

instructions
phrased

to

the

validity

clause,

the

principles

Power,

263

contractual

Va.

but

of

the

once

express

views

the

120-23

of

the

clause

contract

law.

(remanding

because

the

stating

as

with

permissively
that

"either

gave both parties the option to

compelled under the agreement")
light

at

invocation

Virginia

arbitration provision

arbitration,

In

of

arbitration

Party may commence arbitration"
elect

Court

general

compel

or

elected,

"arbitration

[was]

(emphasis added).
language

Subcontract,

and

request for arbitration,

the unopposed nature of Defendants'

in

the

the

Court GRANTS the motion to stay and to compel arbitration of the
instant dispute arising out of the Subcontract before the Court.
In light of

such ruling,

the Court does

not at

this

time reach

the merits of the pending motion to dismiss.2
III.

For

the

reasons

proceedings

in

this

Int'l

289

F.3d

Union,

stated above,

Defendants'

Court

compel

297,

and

303

to

(4th

Cir.

motion

arbitration

2002).

The

to

stay

of

current

the
case,

however, appears distinguishable because THR has the contractual power to
choose the general type of alternative dispute resolution,
not the
decision-makers

themselves

or

the

manner

in

which

arbitration

will

be

conducted.
The Court presumes that, here, counsel for both parties will
work together to ensure an even-handed and unbiased arbitration process.

2 Although this Court does not reach the merits of Defendants' separately
filed motion to dismiss,

a cursory review of the amended complaint,

the

motion to dismiss, and the memorandum in support, suggest that Plaintiff's
amended complaint likely includes sufficient facts, taken as true at the

12(b)(6)

stage,

to satisfy the applicable pleading standard as to one or

more grounds for relief set forth therein.

instant dispute is GRANTED.

ECF No.

13.

No ruling is issued as

to the separately filed motion to dismiss.

ECF No.

12.

It is hereby ORDERED that until this case is reactivated by
Court order,

longer

it

shall

considered

In order

a

to allow

be

stricken from

pending

the

Court

case

the

for

active

administrative

to effectively manage

and with the benefit of encouraging an orderly,
effective
counsel

resolution

for

of

Defendants

this
are

docket

matter,
each

counsel

INSTRUCTED

for
to

purposes.

its

timely,

and no

docket,

and cost

Plaintiff
file

a

and

status

update with this Court no later than December 31, 2014.

The

Clerk

is

REQUESTED

to

send

a

copy

of

this

Order

to

counsel of record for both parties.
IT

IS

SO

ORDERED.

~$my

/s/
Mark
UNITED

Norfolk,

Virginia

September jj

2014

S.

Davis

STATES DISTRICT JUDGE